Safaricom stock up 6pc, buoyed by half-year profit rise

Safaricom CEO Bob Collymore. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • In terms of net inflows as at last Friday, Safaricom unseated KCB as the most attractive to foreign investors.

Telecom services giant Safaricom has gained more than six per cent in price in the past one week after its net profit rose by 30.6 per cent for the six-month period that ended on September 30.

The company has continued to attract foreign investors since last Tuesday when it released the six-month financial results. In yesterday’s trading, the company share price averaged Sh12.95, 75 cents higher than just before it released the results.

Analysts said the net profit growth had contributed to its attraction to foreign investors from early last week. In terms of net inflows as at last Friday, Safaricom unseated KCB as the most attractive to foreign investors.

“Safaricom, up 6.6 per cent week-on-week, unseated KCB to record the highest net inflows for the week at $5.2 million. Demand for the telco built up on the last day of the week following robust first half earnings per share (EPS) which jumped 31.1 per cent year on year to Sh0.37,” said Standard Investment Bank in a statement.

The company made a net profit of Sh14.7 billion against revenue of Sh79.3 billion. The firm was able to use its network of shops around the country to register 40 per cent growth in handset sales to Sh3.1 billion.

Just before the company released its results, foreigners were net sellers of the shares in the stock market as shown by 88 per cent “sells” and 68.5 per cent “buys” for the share.

The release of the results came at a time of uncertainty surrounding the Safaricom business due to the decision by Equity Bank to enter the data and voice sector through the mobile virtual network operator (MVNO).

The main loser in the war over the telecommunications market was seen as Safaricom since it has the largest number of customers, who may also happen to be Equity Bank customers.

However, the telco got new impetus when at the end of last week it disclosed that it was set to start work on its advanced fourth generation network (4G) technology in two weeks, aiming to deliver high-speed wireless Internet in a year’s time.

“The 4G network is the latest GSM technology … (for) high-speed Internet and offers improved video streaming capacity,” said Old Mutual Securities in an update to investors on the new development.

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Note: The results are not exact but very close to the actual.